Wrong Number: Hot Topics In TCPA Compliance & Litigation

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1 Wrong Number: Hot Topics In TCPA Compliance & Litigation Yaron Dori Covington & Burling LLP Nancy Thomas Morrison & Foerster LLP Julie O Neill Morrison & Foerster LLP International Association of Privacy Professionals Privacy Academy 2013

2 What will we cover? Overview of the law and why we care New FCC regulations (1) new prior express written consent requirement for telemarketing calls (voice and text) to mobile phones, and (2) elimination of established business relationship exception for prerecorded telemarketing calls to residential phones Recent trends in TCPA and texting litigation Tips on avoiding regulatory scrutiny and litigation on TCPA issues 2

3 What is the TCPA? The Telephone Consumer Protection Act (TCPA) 47 USC 227 Federal Communications Commission s (FCC) Implementing Rule 47 C.F.R Not to be confused with (1) the Telephone Consumer Fraud and Abuse Prevention Act, 15 USC 6101, and FTC implementing regulations, 16 CFR 310, and (2) Section 14 of the CAN-SPAM Act, 14 USC 7712 The TCPA regulates the use of an autodialer to call a cell phone, as well as the delivery of prerecorded messages to both cell phones and landlines Imposes consent obligations with respect to both telemarketing and nontelemarketing calls to cell phones A call includes a text message The FCC recently revised its TCPA Rule Revised rule takes effect on October 16, 2013 Consents previously obtained under lesser standard no longer valid 3

4 Why do we care? Private right of action Very actively enforced Not unusual to see settlements in the tens of millions of dollars Regulatory enforcement by the FCC TCPA remedies include Injunctive relief Actual damages or up to $500 per violating text or call ($1,500 for willful or knowing violations) Regulatory fines of up to $16,000 per violating text or call 4

5 The rule for non-telemarketing calls Prior express consent is required to use an autodialer or prerecorded voice to deliver a non-telemarketing call (including a text message) to a cell phone Prior express consent is not defined Clear indication that the individual agrees to be called at a designated number (e.g., via web form or text message) Keep records of consent for at least four years The FCC s revised TCPA rule does not change this Don t forget the Mobile Marketing Association and Wireless Association (CTIA) rules applicable to text message campaigns 5

6 What is an autodialer? What is an autodialer? Equipment with the capacity to produce or store, and dial, random or sequential numbers Why don t we just avoid using an autodialer? It is the capacity to generate and call numbers that matters Courts and the FCC have construed the term capacity broadly Is it anything besides completely manual dialing? Court challenges to calls and text messages placed to cell phones have typically survived a motion to dismiss asserting that no autodialer was used on the basis of the term capacity in the definition Whether or not particular equipment is an autodialer becomes a question of fact at trial 6

7 What is telemarketing? What is telemarketing? Includes or introduces an advertisement: any material advertising the commercial availability or quality of any property, goods or services Or constitutes telemarketing: encourag[es] the purchase or rental of, or investment in, property, goods or services FCC: a call is an advertisement if, notwithstanding its free offer or other information, it is intended to offer property, goods or services for sale either during the call or in the future So dual purpose text messages or calls are telemarketing 7

8 What is telemarketing? (cont d) Chesbro v. Best Buy Stores, 697 F. 3d 1230 (9th Cir. 2012) Two separate prerecorded calls: Reminded customers enrolled in a rewards program to use their points or risk their expiration; and Notified enrollees of changes to the program Held: Neither the statute nor the regulations require an explicit mention of a good, product or service where the implication is clear from the context Both messages impliedly urged customers to make purchases by: Encouraging redemption of rewards points; Directing them to a website to engage with the reward program; Thanking them for shopping at Best Buy 8

9 What is telemarketing? (cont d) The determination is fact-specific. For example: A text message advertising daily deals? Yes A text message promoting a movie playing in theaters? Yes A weather or traffic update or other purely informational text message? No, as long as no marketing or advertising material is included A survey? No, unless intended to promote a downstream purchase, rental or investment (e.g., sponsored by CompanyCo -- go to CompanyCo.com for great prices on everyday purchases ) 9

10 The rule for telemarketing calls Today: prior express consent is required to use an autodialer to deliver a telemarketing call or text message to a cell phone Same as for the delivery of non-telemarketing messages As of October 16, 2013: prior express written consent will be required to use an autodialer to deliver a telemarketing text message or call to a cell phone The caller cannot rely on consent obtained before the revised rule s effective date, unless it meets this new standard Keep records of consent for at least four years Don t forget the Mobile Marketing Association and Wireless Association (CTIA) rules applicable to text message campaigns 10

11 What is prior express written consent? An agreement, in writing, that Bears the signature of the person to be called, Clearly authorizes the delivery of marketing text messages or telemarketing calls to that person using an autodialer or prerecorded voice, Includes the phone number to which the person authorizes such delivery, and Clearly and conspicuously discloses that the person is not required to sign the agreement as a condition of a purchase This disclosure is required even if no purchase is involved 11

12 The signature requirement Signature includes an electronic or digital signature, to the extent that it is recognized as valid under applicable law The E-SIGN Act: a signature relating to [a transaction in or affecting interstate commerce] may not be denied legal effect, validity, or enforceability solely because it is in electronic form Electronic signature electronic signature = an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record record = information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form 12

13 The signature requirement (cont d) The FCC s examples of e-signatures: Website form Text message Telephone key press Voice recording Remember that the signature must be attached to or logically associated with a contract or other record, and a record means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form How can we meet this requirement with respect to a text call-to-action? May need a double opt-in, with message sent to request the second optin containing the rule s required disclosures 13

14 Consent Examples The following are examples of how consent may be obtained. They do not replace the disclosure requirements for the call-to-action for a text campaign Consent by web form [ ] I agree to receive autodialed marketing text messages from or on behalf of [the relevant entity] at the phone number provided above. I understand that consent is not a condition of any purchase. Use an unchecked check box, radio button other indicator of affirmative consent Ensure that a record of the consent can be produced, if needed 14

15 Consent Examples (cont d) Consent by Send required disclosures by , and request agreement by return By replying to this with your phone number, you agree to receive autodialed marketing text messages from or on behalf of [the relevant entity] at the number you provide. Your consent to receive messages is not a condition of any purchase. Ensure that a record of the consent can be produced, if needed Must receive a response: failure to respond does not constitute consent 15

16 Consent Examples (cont d) Consent by text message, such as in response to a print, web-based or on-air call to action After the person has texted his/her consent, send a confirmation message that contains the required disclosures and asks him/her to confirm consent with a reply: Reply YES to agree to receive autodialed marketing text messages from or on behalf of [the relevant entity] at this number. Consent to receive messages is not a condition of purchase. Ensure that a record of the consent can be produced, if needed Must receive a response: failure to respond does not constitute consent 16

17 Reminder re: Previously Obtained Consents Because consents previously obtained under the lesser standard no longer are valid for telemarketing calls/tests to mobile phones, one or more of the earlier-described methods must be used to re-opt-in those who are already signed up to telemarketing campaigns, if you wish to continue marketing to them If you do not receive the new consent from a subscriber, you may not deliver telemarketing calls or messages to his or her cell phone, as of October 16, 2013 For example, include the following in a message that the person has already agreed to receive: Reply YES to continue receiving autodialed marketing messages from [the relevant entity] at this number. Your consent is not a condition of purchase. There is risk with sending this as a standalone message (i.e., not in a message the person has already agreed to receive), as the company may not have the requisite consent to send it 17

18 Additional E-SIGN disclosures and consent? Recall: the written agreement shall include a clear and conspicuous disclosure that: By signing, he/she authorizes the delivery of autodialed telemarketing calls He/she is not required to sign as a condition of a purchase E-SIGN 101(c) If a law requires that information relating to a transaction... be provided or made available to a consumer in writing, the information can be provided by means of an electronic record, but only if the consumer receives certain disclosures regarding such electronic provision and specifically consents to them May not provide verbal disclosures of information required to be given in writing Does the revised TCPA rule require that the above disclosures be in writing? 18

19 TCPA Litigation: Prior Express Consent Affirmative Defense Cases generally follow FCC guidelines on consent Providing cell number or initiating communications with text message constitutes consent Lakers text message Pacer account BUT: other cases have required either written or oral consent Expect gotcha suits when new FCC rules take effect 19

20 TCPA Litigation: Prior Express Consent Revoking Consent TCPA language vs. common sense Opt-out confirmation text message does not violate TCPA FCC [SoundBite Communications] Presumed to fall within prior express consent if sent within 5 minutes of receipt of request Limited to one message w/o any marketing 20

21 TCPA Litigation: Class Certification Commonality/Predominance Arguments Critical inquiry: can defendant show significant percentage of class members consent? If so, some courts have held individual issues of consent predominate over common questions such that plaintiff can t prove claim with class-wide proof 21

22 TCPA Litigation: Class Certification Ascertainability Plaintiff must propose way to identify class members How to identify who consented? Current subscriber vs. subscriber at time of the call Adequacy of Class Representative Standing issues Consent provided by the called party Intended recipient or current subscriber? 22

23 TCPA Litigation: Vicarious Liability Acts of Third-Party Telemarketers FCC declaratory ruling FCC [Dish Network] On behalf of: do-not-call vs. prerecorded call Seller can be vicariously liable under common law agency principles Agency principles Did defendant control manner and means by which communication was created and distributed? Apparent authority/ratification? 23

24 Questions? 24

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